Warnings Season: Cree

It’s warning season and investors didn’t like the guidance issued by Cree.

Higher customer inventories and pricing pressure forced Cree Inc to cut its third-quarter revenue and margin forecast, signaling another disappointing quarter from the LED maker.

Looking at the numbers, Cree said revenue would be $215 to $220 million versus a prior estimate of $245 to $265. Analysts on average had expected $254.8 million, according to Thomson Reuters I/B/E/S.

"Our customers had more inventory than we had expected," Cree Chief Executive Chuck Swoboda said on a conference call.

What should you make of these developments?

Find out from Canaccord analyst Jed Dorsheimer. Watch the video now!

Analyze This: Cree

It's warning season and the time when an inventory buildup at Cree could cause big problems, says Jed Dorsheimer, Canaccord Adams. Canaccord has a hold rating on the Cree's stock, but that could change. And options trader Hike Khouw has a trade ahead of RIMM's earnings tomorrow.

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Trader disclosure: On March 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long (AAPL); Tim Seymour is long (BAC); Tim Seymour is long (SBUX); Tim Seymour is long (TM); Tim Seymour’s firm is long (ANTO); Tim Seymour’s firm is long (NEM); Guy Adami owns (AGU); Guy Adami owns (C); Guy Adami owns (GS); Guy Adami owns (INTC); Guy Adami owns (BTU); Guy Adami owns (NUE); Guy Adami owns (MSFT); Steve Cortes is long (TM); Steve Cortes is long (GS); Steve Cortes is long (CSX); Steve Cortes is long (SDY); Steve Cortes is long (SO); Steve Cortes is long Crude Oil; Steve Cortes is short (F); Steve Cortes is short (BAC); Steve Cortes is short (UNP); Steve Cortes is short (SPY); Steve Cortes is short (DBA); Steve Cortes is short Natural Gas; Steve Cortes is short Wheat; Steve Cortes is short Soybeans; Steve Cortes is short Corn; Steve Cortes is short CAD/USD; Steve Cortes is short EUR/USD; Pete Najarian is long (AAPL); Pete Najarian is long (AAPL) call spreads; Pete Najarian is long (BAC) calls

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